Friday

Mar 24, 2017 at 4:20 PMMar 24, 2017 at 4:20 PM

For the second day in a row, stocks started higher and wilted as it became clear the health care bill was in trouble.

NEW YORK — U.S. stocks flirted with sharp losses but managed a mixed finish after Republicans canceled a vote on their health care bill because it became clear the bill would fail. Investors didn't trade much as they waited for answers about the state of President Donald Trump's business-friendly agenda.

For the second day in a row, stocks started higher and wilted as it became clear the health care bill was in trouble. The Dow Jones industrial average plunged as much as 126 points in afternoon trading on reports of the bill's impending failure, although Wall Street cut its losses after the vote was canceled. Consumer-focused companies like Nike, Starbucks and clothing company PVH rose.

The health care act became something of a proxy for the rest of the Trump agenda and it dominated the market for most of this week. It was the week run for stocks since the week before the presidential election. Banks and small-company stocks, which made huge gains after Trump was elected, both suffered their biggest losses in more than a year.

President Trump and other Republican leaders said they were moving on from health care, and Michael Scanlon, a portfolio manager for Manulife Asset Management, said investors will be glad if that happens.

"You're going to see a very quick pivot to corporate tax reform," he said. A corporate tax cut could give stocks a large boost by increasing profits, and it might also raise tax revenue. After the close of trading, House Speaker Paul Ryan said Republicans will proceed with tax reform proposals, but acknowledged the health care debacle will make that task more difficult.

Trading was relatively quiet, which may have contributed to the big fluctuations.

Hospitals and insurers that do a lot of business with Medicaid celebrated the demise of the bill. HCA Holdings, the largest U.S. hospital company, climbed $2.87, or 3.5 percent, to $86.04 and Community Health Systems jumped 84 cents, or 9.7 percent, to $9.54. Among Medicaid-focused companies, Centene and Molina Healthcare each gained about 5 percent.

The American Health Care Act would likely have left more Americans uninsured and would make big changes to Medicaid, a joint federal-state health program for low-income Americans. Those stocks fell when it was introduced those stocks fell because investors were concerned hospitals would have to take in more patients who lack insurance and that insurers would get less money from Medicaid.

With the 2010 Affordable Care Act alive for another day, insurance companies slumped. Cigna fell $3.36, or 2.3 percent, to $142.82 and Anthem shed $2.63, or 1.6 percent, to $126.77.

With Trump and majority Republicans unable to pass the first big item on their agenda, there were some signs of concern that his proposals of tax cuts, infrastructure spending, and regulatory cuts will take longer. Those are aspects of Trump's proposed agenda Wall Street is excited about.